Friday, March 31, 2023

After months of COVID delays, African free trade bloc launches | Business and economic news

Must read


After months of delays caused by the COVID-19 pandemic, the African Continental Free Trade Area is launched, but full implementation of the historic pact may take years.

African countries officially began trading under a new continent-wide free trade area on Friday, after months of delays caused by the global coronavirus pandemic.

But experts see the New Year’s launch as largely symbolic, with full implementation of the deal expected to take years.

The African Continental Free Trade Area (AfCFTA) aims to bring together 1.3 billion people in a $ 3.4 trillion economic bloc that will be the largest free trade area since the establishment of the World Organization. trade.

Proponents say it will boost trade among African neighbors while allowing the continent to develop its own value chains. The World Bank estimates that it could lift tens of millions of people out of poverty by 2035.

“A new Africa is emerging with a sense of urgency and purpose and an aspiration to become self-reliant,” Ghana President Nana Akufo-Addo said at an online launch ceremony.

But obstacles – ranging from ubiquitous bureaucracy and poor infrastructure to entrenched protectionism of some of its members – must be overcome if the bloc is to reach its full potential.

Trade under the AfCFTA was supposed to start on July 1, 2020, but was pushed back after COVID-19 made face-to-face negotiations impossible.

However, the pandemic has also given additional momentum to the process, said Wamkele Mene, secretary general of the AfCFTA secretariat.

“COVID-19 has demonstrated that Africa is too dependent on the export of commodities, too dependent on global supply chains,” he said. “When global supply chains are disrupted, we know Africa suffers.”

All African countries except Eritrea have signed the AfCFTA framework agreement and 34 have ratified it. But observers such as W Gyude Moore – a former Liberian minister who is now a senior fellow at the Center for Global Development – say the real work is starting now.

“I would be surprised if they could put everything in place within 24 months,” he told Reuters news agency. “To be successful in the long term, I think we’ll have to look at how long it took Europe. This is a decades-long process. “

Obstacles – ranging from pervasive bureaucracy and poor infrastructure to the entrenched protectionism of some of its members – must be overcome if the AfCFTA is to reach its full potential [File: Goran Tomasevic/Reuters]

‘We have to start somewhere’

Historic challenges, including poor road and rail connections in Africa, political turmoil, excessive border bureaucracy and petty corruption will not go away overnight.

And an annex to the agreement outlining rules of origin – a critical step in determining which products can be subject to tariffs and duties – has yet to be completed.

At the same time, 41 of the 54 member states in the zone submitted tariff reduction schedules.

Members must eliminate 90% of tariff lines – over five years for more advanced economies or over 10 years for less developed countries. Another 7% deemed sensitive will have more time, while 3% will be allowed to be placed on an exclusion list.

Finalizing these timetables and communicating them to businesses must be done quickly, said Ziad Hamoui of Borderless Alliance, a group that campaigns to facilitate cross-border trade.

But efforts to implement the deal are likely to meet resistance from countries’ national interest groups. Fears of losing to more competitive neighbors initially made some countries, including West African giant Nigeria, skeptical of the Pan-African project.

However, the promoters of the zone are convinced that the first stages of its implementation will already allow member states to rapidly stimulate intra-African trade.

“Economic integration is not an event. It’s a process, ”said Silver Ojakol, chief of staff at the AfCFTA secretariat. “We have to start somewhere.”


- Advertisement -spot_img

More articles


Please enter your comment!
Please enter your name here

- Advertisement -spot_img

Latest article